Fundamentals of Financial Management, Third Edition

OBJECTIVE-TYPE QUESTIONS

1. Mark true or false.
   1. ROI is the net profit divided by sales.
   2. Quick ratio is the ratio between current assets and current liabilities.
   3. Inventory turnover ratio is equal to inventory divided by the cost of goods sold.
   4. Asset turnover ratio is sales divided by assets.
   5. Return on equity is the net profit divided by equity.
   6. Capitalisation rate is the reciprocal of the P/E ratio.
   7. A firm’s ability to pay interest on its debt can be reflected through time interest earned ratio.
   8. Equity divided by the number of outstanding shares is book value.
   9. Dividend yield is the ratio of dividend per share to the market price of a share.
   10. Dividend pay-out ratio is the share of the dividend in the net earning.
2. Choose the most suitable answer. ...